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The politics of procurement – major parties release procurement plans

07 February 2019

#Construction & Infrastructure, #Procurement

Published by:

Andrew Morello

The politics of procurement – major parties release procurement plans

The federal election will take place prior to 18 May this year and the two major parties have now declared their position on procurement. 

Federal Labor released its plan on 21 January 2019, campaigning under the slogan “Local Projects. Local Jobs: Labor’s National Procurement Plan”. The plan will aim to stimulate small and medium business growth throughout local communities and comes a few months after the Liberal Government released its second campaign issue of “Backing Small Business”.

If implemented, Labor’s policy will see local businesses become the backbone of Commonwealth Government projects with a value of over $10 million as these will require a ‘Plan for Local Jobs’ section within the tender document. 

Labor has stated competition needs to be shared among locals who are locked out of job opportunities due to multinationals using their own suppliers. Labor claims the Commonwealth Government spends $50 billion every year on goods and services, which, they say, can be better allocated towards local contracts.

Labor’s three-point plan[1] 

Labor has announced a three-point plan which includes:

1. Better access to government contracts for local businesses

  • a local community contact will need to be nominated by successful bidders to raise awareness with local businesses of the upcoming tender and subcontracting opportunities
  • allocation of government departments will be required to work with local firms to ensure they benefit from government contracts
  • a ‘Plan for Local Jobs’ section will be required within tender documents for projects over $10 million
  • local labour-market testing will apply to companies wishing to employ new employees to ensure Temporary Visa holders are not undercutting local resources
  • officials will be required to consider both financial and non-financial costs and benefits of procurement.

2. Supporting local business at home and abroad

  • Labor will put plans in place to give Australian firms a chance to win more private and public projects
  • for public projects, these plans will be included at the project development and tender process
  • for projects over $250 million, an Australian Industry Participation plan will need to be in place to help ensure local firms are provided with an opportunity to win more work
  • Labor plans to work with more industry groups.

3. More local apprentices and boosting TAFEs

  • Labor will impose a 1 in 10 policy, where 1 in 10 workers on a major project will need to be an apprentice in order to encourage skill development for new local workers
  • this policy is an addition to Labor’s commitment to scrap upfront fees for 100,000 TAFE students and establish a $100 million Building TAFE for the Future Fund for upgrades to TAFE around Australia.

Conversely, the Liberal Party’s plan, as it relates to procurement, focuses on the following areas:[2]

1. Red tape relief 

  • $300 million is being allocated to states and territories to reduce the regulatory burden on small business. Depending on which regulations are targeted this may assist small business in engaging with Government through the procurement process.

2. Helping cash flow

  • from July 2019, the Government will implement a policy making them liable to pay invoices for contract work up to $1 million within 20 days
  • the same will apply to large businesses who tender for Government contracts.

3. Fairer competition 

  • the Liberal’s propose to reduce big businesses market power by amending the Australian Competition Law
  • introduction of new unfair contract legislation
  • a new independent body called Australian Financial Complaints Authority will be established to provide free, fast and binding dispute resolution to small business
  • a Small Business Ombudsman will also be established.

It will be interesting to see how these areas develop, and the differences that are drawn out between the parties, as the election draws closer.

[1] Labor Government, ‘Local Projects. Local Jobs: Labor’s National Procurement Plan’ Parliament of Australia, 21 January 2019. More...
[2] Liberal Government, ‘Backing Small Business’ Liberal Issue 2, November 2018. More...

Author: Scott Alden & Andrew Morello

Scott Alden, Partner 
T: +61 2 8083 0419 

Stephen Natoli, Partner 
T: +61 3 9321 9796 

Troy Lewis, Partner & National Head of Construction and Infrastructure 
T: +61 7 3135 0614 

The information in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this publication is accurate at the date it is received or that it will continue to be accurate in the future. We are not responsible for the information of any source to which a link is provided or reference is made and exclude all liability in connection with use of these sources. 

Published by:

Andrew Morello

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